Buying with monopoly money

[MountainBound]

Bearishgirl….I am looking at Big Bear or Lake Arrowhead. However I am concerned about retiring in CA. I believe that Prop. 13 will be repealled or amended in the near future, making retiring here impossible. Someone is going to balance the budget, the only people with money are property owners.

[Huckleberry]

[quote=GH]Just keep in mind that housing prices and interest rates have no relationship

Nonsense! Prices are falling today because at ANY interest rate very few can afford, and there are millions of foreclosures out there dropping prices. Credit scores are all but trashed these days, incomes are off and frankly no matter the spin prices ARE falling. If interest rates were raised to say 15% prices would fall massively as far fewer of the dwindling supply of credit qualified applicants could qualify for $500K at 15% than could qualify at 5%.

Assuming 10% down, your monthly payment incl tax will be ~3,000 /MO at 5% and ~6,200 /MO at 15%, so obviously many can afford the $3,000 payment but very few could afford the $6,200 payment.

This is simple math and not subject to opinion![/quote]

I concur with this 100%! No need for anymore debate on this…

[Huckleberry]

[quote=GH]Just keep in mind that housing prices and interest rates have no relationship

Nonsense! Prices are falling today because at ANY interest rate very few can afford, and there are millions of foreclosures out there dropping prices. Credit scores are all but trashed these days, incomes are off and frankly no matter the spin prices ARE falling. If interest rates were raised to say 15% prices would fall massively as far fewer of the dwindling supply of credit qualified applicants could qualify for $500K at 15% than could qualify at 5%.

Assuming 10% down, your monthly payment incl tax will be ~3,000 /MO at 5% and ~6,200 /MO at 15%, so obviously many can afford the $3,000 payment but very few could afford the $6,200 payment.

This is simple math and not subject to opinion![/quote]

I concur with this 100%! No need for anymore debate on this…

[Huckleberry]

[quote=GH]Just keep in mind that housing prices and interest rates have no relationship

Nonsense! Prices are falling today because at ANY interest rate very few can afford, and there are millions of foreclosures out there dropping prices. Credit scores are all but trashed these days, incomes are off and frankly no matter the spin prices ARE falling. If interest rates were raised to say 15% prices would fall massively as far fewer of the dwindling supply of credit qualified applicants could qualify for $500K at 15% than could qualify at 5%.

Assuming 10% down, your monthly payment incl tax will be ~3,000 /MO at 5% and ~6,200 /MO at 15%, so obviously many can afford the $3,000 payment but very few could afford the $6,200 payment.

This is simple math and not subject to opinion![/quote]

I concur with this 100%! No need for anymore debate on this…

[Huckleberry]

[quote=GH]Just keep in mind that housing prices and interest rates have no relationship

Nonsense! Prices are falling today because at ANY interest rate very few can afford, and there are millions of foreclosures out there dropping prices. Credit scores are all but trashed these days, incomes are off and frankly no matter the spin prices ARE falling. If interest rates were raised to say 15% prices would fall massively as far fewer of the dwindling supply of credit qualified applicants could qualify for $500K at 15% than could qualify at 5%.

Assuming 10% down, your monthly payment incl tax will be ~3,000 /MO at 5% and ~6,200 /MO at 15%, so obviously many can afford the $3,000 payment but very few could afford the $6,200 payment.

This is simple math and not subject to opinion![/quote]

I concur with this 100%! No need for anymore debate on this…

[Huckleberry]

[quote=GH]Just keep in mind that housing prices and interest rates have no relationship

Nonsense! Prices are falling today because at ANY interest rate very few can afford, and there are millions of foreclosures out there dropping prices. Credit scores are all but trashed these days, incomes are off and frankly no matter the spin prices ARE falling. If interest rates were raised to say 15% prices would fall massively as far fewer of the dwindling supply of credit qualified applicants could qualify for $500K at 15% than could qualify at 5%.

Assuming 10% down, your monthly payment incl tax will be ~3,000 /MO at 5% and ~6,200 /MO at 15%, so obviously many can afford the $3,000 payment but very few could afford the $6,200 payment.

This is simple math and not subject to opinion![/quote]

I concur with this 100%! No need for anymore debate on this…

[Huckleberry]

[quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…

[Huckleberry]

[quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…

[Huckleberry]

[quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…

[Huckleberry]

[quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…

[Huckleberry]

[quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…

[Effective Demand]

[quote=Huckleberry][quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…[/quote]

But I don’t think my point is fully explained. The point I am trying to make is about monetary policy. Deadzone is both right and wrong, he is right that if in today’s enviroment we had 10% interest rates, house prices would fall. He is wrong to assume we would have 10% interest rates as that is a completely improper monetary policy relative to the conditions. Just as one can say that housing prices and interest rates aren’t linked, that is correct in that it assumes monetary policy reflects economic conditions but it is incorrect to say that if interest rates were too high (or low) relative to economic conditions that prices wouldn’t fall or rise.

That is the larger point that I am trying to make. Everyone is “right” and “wrong” in there points regarding interest rates and housing prices. But if you assume that monetary policy reflects economic conditions then, in general, interest rates and housing prices not being interlinked is “more right” (imho).

[Effective Demand]

[quote=Huckleberry][quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…[/quote]

But I don’t think my point is fully explained. The point I am trying to make is about monetary policy. Deadzone is both right and wrong, he is right that if in today’s enviroment we had 10% interest rates, house prices would fall. He is wrong to assume we would have 10% interest rates as that is a completely improper monetary policy relative to the conditions. Just as one can say that housing prices and interest rates aren’t linked, that is correct in that it assumes monetary policy reflects economic conditions but it is incorrect to say that if interest rates were too high (or low) relative to economic conditions that prices wouldn’t fall or rise.

That is the larger point that I am trying to make. Everyone is “right” and “wrong” in there points regarding interest rates and housing prices. But if you assume that monetary policy reflects economic conditions then, in general, interest rates and housing prices not being interlinked is “more right” (imho).

[Effective Demand]

[quote=Huckleberry][quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…[/quote]

But I don’t think my point is fully explained. The point I am trying to make is about monetary policy. Deadzone is both right and wrong, he is right that if in today’s enviroment we had 10% interest rates, house prices would fall. He is wrong to assume we would have 10% interest rates as that is a completely improper monetary policy relative to the conditions. Just as one can say that housing prices and interest rates aren’t linked, that is correct in that it assumes monetary policy reflects economic conditions but it is incorrect to say that if interest rates were too high (or low) relative to economic conditions that prices wouldn’t fall or rise.

That is the larger point that I am trying to make. Everyone is “right” and “wrong” in there points regarding interest rates and housing prices. But if you assume that monetary policy reflects economic conditions then, in general, interest rates and housing prices not being interlinked is “more right” (imho).

[Effective Demand]

[quote=Huckleberry][quote=Effective Demand]Regarding interest rates and housing prices.

The issue is WHY rates are high or low. Rates are high because of high inflation or high growth, Rates are low because of low inflation (or deflation) or low growth. If you put high rates in a low growth scenario, it would no doubt effect housing prices, just as low rates in a high growth scenario would.[/quote]

This is exactly spot on! That is why this time is different than in the past…[/quote]

But I don’t think my point is fully explained. The point I am trying to make is about monetary policy. Deadzone is both right and wrong, he is right that if in today’s enviroment we had 10% interest rates, house prices would fall. He is wrong to assume we would have 10% interest rates as that is a completely improper monetary policy relative to the conditions. Just as one can say that housing prices and interest rates aren’t linked, that is correct in that it assumes monetary policy reflects economic conditions but it is incorrect to say that if interest rates were too high (or low) relative to economic conditions that prices wouldn’t fall or rise.

That is the larger point that I am trying to make. Everyone is “right” and “wrong” in there points regarding interest rates and housing prices. But if you assume that monetary policy reflects economic conditions then, in general, interest rates and housing prices not being interlinked is “more right” (imho).

[Author]

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